Schedule K-1 (Form 1065, Partner’s Share of Income, Deductions, Credits, etc.) is filed by partnerships to report to the IRS their share of income, deductions, credits, etc. received from the partnership. Schedule K-1 includes each partner’s share of income received. The information on this tax document helps taxpayers to prepare their individual tax returns.
A taxpayer may expect to receive Schedule K-1 around the time of receiving Form 1099, but it may be one of the last tax documents to reach a taxpayer.
What the Form Includes
Schedule K-1 includes the following parts:
- Part 1: Information about the partnership
- Part II: Information about the partner
- Part III: Partner’s share of current year income, deductions, credits, and other items
Filing and Reporting
Depending upon the type of business (trust, partnership, S corporation), Schedule K-1 filing and reporting requirements differ.
In a partnership, each partner is responsible for paying taxes on the income. Along with filing their individual tax returns and partnership’s return, the partners are also required to prepare Schedule K-1 where they report their share of income received from the partnership.
S corporations use Schedule K-1 to report the income, deductions, credits, etc. received by each shareholder. The shareholders use the information on Schedule K-1 to prepare their individual income tax returns.
Trusts, if they pass over income to the beneficiaries, are required to send a Schedule K-1 to each beneficiary. The document includes the income that the beneficiary received from the trust, which they need to include on their tax return.